How you pay for it
Power Purchase Agreement (PPA)
Buy the power, not the system. A PPA funds the installation of your solar solution through a contractual agreement, so you buy the PV-produced electricity at a fixed cost over an agreed period. There is no capital outlay, and the savings start from the day the system is commissioned.
- Upfront capital
- None
- Who owns the system
- The PPA provider
- You pay for
- The solar kWh you use
- Typical term
- 10 to 25 years
How a PPA works
Under a Power Purchase Agreement, a solar PV system is designed and installed on your roof, carport or land, but it is owned by a PPA provider (the funder), not by you. You are the off-taker: you agree to buy the electricity the system produces, metered in kWh, at a tariff set in the agreement. Whatever the solar plant does not cover, you continue to draw from Eskom or your municipality as before.
The PPA tariff is set below the blended rate you currently pay the utility, so you save on every kWh the system supplies. The tariff then escalates once a year by a mechanism fixed in the contract, usually linked to CPI or set at an agreed percentage. Because utility tariffs in South Africa have historically risen faster than inflation, the gap between the two rates is what produces your savings over the term. Your future solar cost is known from the start, which makes energy a predictable line item rather than an uncontrolled one.
The provider carries the capital cost and the performance risk. It insures the system, monitors it remotely and pays for maintenance and repairs for the full term. If the plant underperforms, that is the provider's problem to fix, because it only earns when the system produces.
Who pays for what
The split of responsibilities is written into the agreement. In a typical South African commercial PPA it looks like this.
Installation
Paid for by the PPA provider. You do not fund the panels, inverters, mounting structures, cabling or commissioning.
Maintenance and repairs
The provider's responsibility for the whole term, including preventative maintenance, panel cleaning schedules and component replacement.
Insurance
Normally carried by the provider, as the asset owner. You remain responsible for your building and for giving reasonable access to the system.
Monitoring
Remote monitoring is part of the service. Production data also forms the basis of your monthly invoice, so you can see exactly what you paid for.
Your monthly bill
The solar kWh you use, multiplied by the PPA tariff, plus your reduced utility account. No rental, no instalment, no deposit.
Take-or-pay or pay-for-use
Some PPAs are take-or-pay, where you pay for energy the system can deliver even if you do not use it. Others charge only for what you consume. We design the system around your load profile so the difference matters as little as possible, and we explain which applies before you sign.
The four models side by side
Every model delivers the same engineered system. What changes is who owns it, who pays for it, and how the savings reach you.
| Aspect | PPA | Installment sale | Rental | Outright purchase |
|---|---|---|---|---|
| Who owns the system | The PPA provider, for the full term | The financier, until the final payment; then you | The rental provider, for the full term | You, from day one |
| Upfront cost | None | None or a deposit, depending on the lender | No deposit | The full system cost |
| What you pay | A per-kWh tariff for the solar energy you use | A fixed instalment over the term | A fixed monthly rental over the term | Once, on completion of agreed milestones |
| Who maintains it | The provider | You, as the purchaser, usually under a maintenance plan | Normally the provider, as set out in the agreement | You, with SolarSkye servicing it for the life of the system |
| Balance sheet and tax angle | Usually an operating expense; no Section 12B claim for you | The asset is yours for tax; Section 12B may apply, depending on the structure | An operating expense; no Section 12B claim for you | Your asset; Section 12B accelerated allowance where you qualify |
| When savings start | From commissioning, as the gap between the PPA tariff and your utility tariff | From commissioning, net of the instalment | From day one, net of the rental | From commissioning, in full, once the investment is paid back |
What you need to qualify
A PPA is a long-term contract, so the funder looks at the site and at the business behind it.
The site
- A structurally sound roof, carport or piece of land with good solar exposure
- Ownership of the property, or a lease that runs at least as long as the PPA
- Landlord consent where you are a tenant, and a registered servitude or roof lease where the funder requires one
- Space and access for inverters, protection equipment and future maintenance
The business
- Credit vetting, usually based on recent audited or reviewed financial statements
- A steady daytime load, so most of the solar energy is used on site
- At least 12 months of electricity accounts, and metering data where it exists
- A reasonable expectation that the operation will be at the site for the term
From consult to a running system
SolarSkye structures the solution and works with the funding arrangement that suits you. The engineering is the same as for any system we build.
- 01Consult & Site AuditWe study your electricity accounts and load profile and assess the roof or land. This tells us whether a PPA makes sense for your site at all.
- 02Solution Design & DiscussionWe design a system sized to your daytime demand, so the energy is used on site, and we discuss the indicative PPA terms alongside the alternatives.
- 03Funding and agreementThe funder completes its credit and site due diligence. You review the tariff, escalation, term and end-of-term options before anything is signed.
- 04Approvals & InstallationWe handle grid-connection approval with Eskom or the municipality and any registration required, then our in-house team installs.
- 05Inspections & CommissioningThe system is tested, certified and commissioned. Metered production, and your PPA billing, starts here.
- 06Monitoring & MaintenanceThe system is monitored and maintained for the term, so it keeps producing the energy you are paying for.
PPA questions
Will I pay more than I pay the utility today?
The PPA tariff is set below your current utility rate for the energy the system supplies. Any electricity you still draw from the grid is billed by the utility as before. Your quote will show both, based on your own accounts.
What happens at the end of the term?
The options are written into the agreement. Commonly you can extend the PPA, buy the system at an agreed or fair market value, or have the provider remove it at its own cost. Some agreements transfer the system to you at the end. Panels are typically warranted to produce well beyond a normal PPA term, so a buy-out is often worth considering.
Can I claim Section 12B under a PPA?
No. Section 12B benefits the owner of the asset, and under a PPA that is the provider. You pay for electricity, which is generally treated as an operating expense. If the tax allowance is important to you, compare an outright purchase or an installment sale. Your tax practitioner should confirm the treatment for your business.
What if we move or sell the property?
A PPA usually allows the agreement to be transferred to a new owner or occupier, or ended early through a buy-out at a value set out in the contract. This is one reason funders look at property ownership and lease terms during vetting.
Does a PPA include battery storage?
It can. Battery energy storage (BESS) is sometimes included in the PPA, and sometimes provided under a separate rental or lease alongside it. We will set out which approach fits your load profile and backup needs.
See what a PPA would look like on your site
Send us your recent electricity accounts. We will assess your load profile and site, and show you how a PPA compares with the other ownership models for your business.
Power On!